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Climate Change and Insurance


For whatever reason, people are still divided to some degree about their thoughts on climate change, ranging from those who believe it is affecting us already, those who believe it is a giant conspiracy and those who believe it to be real, but won’t affect us in our lifetime.

Protect your business from whether related catastrophe

Whichever view you subscribe to; the reality is a definite pattern of increased severe weather events. A 2016 ClimateWise report found that frequency of weather-related catastrophes around the world has increased sixfold since the 1950s.

You may think that this has no effect on your travel business. Unfortunately, this could not be further from the truth. Working in travel, you send people all over the world, but closer to home, these severe weather events are already having an impact on your insurances.

Following the massive floods in Australia in 2010-2011, it became much more common for Insurers to offer flood cover – in fact, most home and contents policies now offer flood insurance. However, rather than those floods being “once in a lifetime”, or as they were commonly referred to as “1 in 50 years” or “1 in a 100 year” events, they kept happening …. Consequently, Insurers all scrambled for improved flood mapping information and if you were in the unfortunate situation of being located in a high flood area, either flood cover was no longer offered, or premiums exploded.

Another common part of an Australian Summer - bushfires, but lately the severity and size have seen massive damage to property and unfortunately in some cases, even lead to loss of life. This is despite better resources and technology being available. Sometimes sitting in a city office, it seems a world away, however, Insurers suffering losses is never good for anyone who has an insurance policy.

Even events like storms and intense rain cells are becoming more destructive and causing more damage to homes and businesses, and more loss of income – both for those who have been victims and those Insurance Companies covering the risk. According to statistics from the NRMA, more than half (52%) of all home claims made in NSW over the past financial year were related to storm damage alone.

Over many years the cycle of insurance seems to be the same – insurance premiums increase, and customers look for a way to cut costs and their first choice is to reduce their cover or cancel it completely. Especially for businesses, in tough financial times, for whatever reason, often Insurance is one of the first casualties of cost cutting, but it should be the last. It is crucial for business owners to remember why they have the insurance – to protect their livelihood if the worst does happen.

Do not be fooled into thinking “it won’t happen to me”. Whilst you might be safe from bushfires in a CBD location, whilst you might be on the top of the hill so you don’t believe you will be hit by flood, these are not the only perils insurance protects you from.

Rather than Insurance being one of the expenses to cut – it should be one of the most important ways in which you protect your business.

It is imperative that you take the time to review your Insurance Programme with your broker and discuss:

  • Are my current sums insured adequate should the business suffer a major loss?
  • Do I have business interruption to protect me from loss of income following a major loss?
  • Do I have flood cover?
  • Could I be under insured and how will this affect me?
  • Do I have the right cover in place for other risks?
  • Should I have additional policies?

It is too often the case that Policy Holders will make reductions to save $100 or so, which can be massive cuts to their protection in a total loss – a difference of tens or even hundreds of thousands of dollars.

Contact your Insurance Broker and make sure you have the right insurance in place

If you believe that this issue is relevant to your business, please feel free to contact Rebecca Fleming, Account Manager of our Travel Industry Division at Gow-Gates Insurance Brokers on (02) 8267 9919 or rfleming@gowates.com.au to discuss your circumstances or to obtain a quotation.

Gow-Gates Insurance Brokers advises that persons should not act on the material contained in this article as the items are of a general nature only and may be misinterpreted. We therefore recommend that advice be sought before acting in these areas.